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retail | IST

India's e-retail market to overtake modern trade in 5 years: Report

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India's e-retail market is likely to grow at 30 percent per annum to reach $120–140 billion by 2026 and is expected to be higher than modern trade by 2026, a report said.

India’s e-retail market surged 25 percent to reach $38 billion through FY21 despite the overall retail market shrinking by 5 percent and a 7.3 percent contraction in GDP, according to a recent report by consultancy firm Bain & Co and e-commerce platform Flipkart.
The report states the e-retail market is likely to grow at 30 percent per annum to reach $120–140 billion by 2026 and is expected to be higher than modern trade by that year.
Here are the highlights from Bain & Co and Flipkart report titled 'How India Shops Online 2021':
FY21
In FY21, the country’s e-retail market grew by 25 percent to $38 billion even as the overall retail market shrank by 5 percent. Moreover, e-retail penetration in the fiscal was 4.6 percent, the report said.
The e-grocery segment grew by as much as 80 percent as grocery, household, and personal care items saw continued accelerated growth. Electronics, on the other hand, witnessed one-time growth whereas fashion and travel products saw slower growth.
At $810 billion, the Indian retail market is the fourth largest in the world. India has the third-largest online shopper base of 140 million, only behind China and the US.
Future projections
The report suggests that the e-retail market is likely to grow at 30 percent per annum to reach $120–140 billion by 2026. It is also expected to be higher than modern trade in the next five years.
E-retail penetration by 2026 is likely to be around 10 to 11 percent, the report said, adding that four of every five new shoppers would be from small towns.
The report suggests that the modern trade gross merchandise value (GMV) would be $105 to $115 billion by 2026. It added that the social commerce GMV, which was approximately $1.5–2 billion in FY20, could grow at a 55 to 60 percent CAGR over FY20–25.
Trends
One in three people shopped online at least once last year in the top eight metro cities, the report said, adding that Bengaluru led the way with one in two people shopping online at least once last year.
It said approximately 40 percent of online shoppers in 2020 made at least one purchase through social media channels like Facebook, Instagram, and WhatsApp.
Moreover, one in 10 platform users adopt voice search, and one in 3 new e-retail users visit through a vernacular platform interface, the report stated.
D2C brands in India—both established and insurgent nearly doubled from two years ago.
Moreover, Bain & Co and Flipkart found that cash purchases continued to account for approximately 45 to 50 percent of the e-retail GMV even during the pandemic. The use of voice-assistant apps doubled to approximately 5–6 million monthly users in 2021 (average until May), according to the report.